Florida Joins Other States’ Wayfair Nexus Standard for Online Sales Tax Collection

This blog was originally published on February 26, 2021. It was updated on April 21, 2021.

Governor Ron DeSantis signed Senate Bill 50 (CS/CS/SB 50), which adds Florida to the rest of the states (except Missouri) that require out-of-state sellers with no physical presence in Florida to start collecting Florida sales tax if they have annual sales delivered to Florida customers of more than $100,000.

The U.S. Supreme Court’s decision in the South Dakota v. Wayfair, Inc. case in June of 2018 overturned the substantial physical presence standard for nexus and set forth the landscape for states to enact economic nexus laws for sales and use tax purposes. Subsequently, most states to date that impose a sales and use tax have enacted an economic nexus law, and Florida just joined the list.

After a slow start, support for the enactment of an economic nexus law in Florida gained momentum spurned on by the fiscal impact the COVID-19 pandemic has had on Florida’s tax revenues. Economic nexus laws establish thresholds based on volume of gross sales and/or number of transactions with customers in the state that, when exceeded, require out-of-state businesses to collect and remit sales tax to the state where the customers reside.

Impact on businesses and taxpayers

Under Senate Bill 50, remote sellers (out-of-state vendors) whose gross sales of tangible products (not services) delivered to customers in Florida that exceed $100,000 in the previous calendar year will be considered to have economic nexus with Florida. As such, they will be required to register and begin collecting and remitting sales tax to the Florida Department of Revenue.

Additionally, SB 50 imposes sales tax registration and collection requirements on marketplace facilitators (or marketplace providers) operating online platforms through which other e-commerce vendors sell their products. These are online platforms, such as Amazon and Shopify, that list the products of a wide range of vendors for sale through their platform and collect the proceeds for the individual vendors.

Remote sellers who have sales both through and outside of marketplace facilitator platforms should only count their Florida sales outside marketplace facilitator platforms to determine if they have exceeded the $100,000 threshold. Remote sellers who exceed the threshold on this basis are required to register and start collecting and remitting sales tax on their unfacilitated sales to Florida customers.

The new law uses the prior calendar year to measure whether a remote seller’s or marketplace facilitator’s volume of Florida sales has exceeded the $100,000 annual threshold. The law applies to remote sales made or facilitated on or after July 1, 2021.

Remote sellers and marketplace facilitators who have met the Florida sales threshold are required to register by October 1, 2021. If they do not comply with this registration requirement, they could be subject to tax penalties and interest for remote sales prior to July 1, 2021.

Be ready to act quickly

Any business based outside of Florida that is selling products to Florida customers should be aware of this new law. Since the bill provides that prior calendar year sales will be used to determine if economic nexus thresholds have been met, many businesses will likely have economic nexus with Florida on day one of the law becoming effective. Consequently, businesses need to be poised to act swiftly to comply with the new legislation.

Kaufman Rossin’s State and Local Tax (SALT) practice has extensive experience helping businesses comply with economic nexus laws, as well as other forms of nexus and state tax laws in all states. Contact us to learn more about this proposed Florida legislation, and how your business may be impacted if it becomes law.